While there has been limited investment in the oil & gas sector and it remains under explored compared with its regional peers, the lack of meaningful (conventional) exploration targets means that it is unlikely to gain much traction in the near to medium-term. This, coupled with the unsettled geopolitical outlook results in a high Risk Rate and our Neutral outlook.
June 14, 2021
Simple Production Sharing Contract (PSC)-based fiscal regime, reflecting the frontier nature of Jordan’s onshore acreage. No royalty is payable. Profit oil splits are based on production rates, whilst corporate income tax is paid on the contractors behalf by the government. There are no bonuses, rentals or fees.
Jordan’s economy grew by two% in 2019, despite ongoing domestic and regional challenges. Jordan’s economic growth has been slowed for several years by series of exogenous shocks, starting with the Global Financial Crisis in 2008, followed by the Arab Spring in 2011 which resulted in interruptions of energy imports, the 2015 closure of Jordan’s borders with Iraq (reopened in August 2017) and Syria (partially re-opened in 2018), and an influx of Syrian refugees. By October 2019, foreign direct investment had dropped 29% from its level at the end of 2018 and 67% from 2017 levels. During this same period, the government ran large annual budget deficits but has been able to reduce its near-term financing gap with loans, foreign assistance, and savings from economic reform measures enacted as part of an International Monetary Fund (IMF) Extended Fund Facility program that began in August 2016. On March 25, 2020, the IMF Board approved a USD 1.3 billion Extended Fund Facility program for Jordan centred on increasing economic growth, job creation, and transparency while and strengthening fiscal stability and social spending. The COVID-19 outbreak poses a huge burden on the Jordanian economy. The IMF forecasts a 3.4% contraction in Jordan’s Gross Domestic Product (GDP) for 2020 as a result of the pandemic.
Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.
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